A significant portion of school-aged youth work and the consequences of that work are of potential concern to society. Youth employment is associated with educational achievement, social development, and future labor market outcomes. While there is widespread public support for combining work and school, and some evidence that employment has positive effects on youth development, previous research has also uncovered some potentially harmful consequences of employment among school-aged teens. In particular, there is considerable evidence that employment is positively related to alcohol, cigarette and marijuana use (National Research Council 1998). The positive relationship between youth employment and substance use is especially important given the addictive nature of these goods, which puts youth at risk of a lifetime of use and abuse of these substances. A key policy question, which previous research has not adequately addressed, is to what extent employment causes youth to initiate or change their use of potentially harmful substances, and the mechanisms that underlie any causal relationship. On the one hand, employment may not be a cause of youth substance use;any association between youth employment and substance use may simply reflect the influence of a confounding factor such as family background. Alternatively, employment may causally affect youth substance use. If so, it is important from a public policy perspective to identify the causal pathway that links employment to youth substance use. The purpose of the proposed research is to identify the importance of employment and earned income on youth substance use. While there have been several studies that have examined the associations between employment, earned income and substance use, none of these studies have provided estimates of a causal relationship, which is essential to devising effective public policies. The primary limitation of previous studies is that the relationship between employment, earned income and substance use is likely to be confounded by omitted variables. In the proposed research, we will control for confounding by using exogenous changes in employment and earned income, caused by changes in minimum wages and aggregate economic activity (unemployment), to identify the effect of these factors on substance use. PROJECT HEALTH RELEVANCE A significant portion of school-aged youth work and there is evidence that employment is positively related to alcohol, cigarette and marijuana use. The addictive nature of these substances and the potentially serious health consequences of substance use underscore the importance of public health policy targeted at reducing youth substance use. The proposed research will identify the importance of employment and earned income on youth substance use and produce information that can be used to design effective public health policy to address this problem.